The American People Can Handle the Truth About the Economy: Can Washington

Who does the Fed think it’s kidding? Somehow we are supposed to believe it that the economy is growing, inflation is under control, and the big banks the Fed has been breastfeeding are somehow more solvent than they were two years ago. Fortunately, we live in a country where, despite the old adage, it is rarely possible to fool all of the people even some of the time.

That’s especially true of people who’ve already been fooled several times in recent memory. First it was the ratings agencies, whose reckless and conflicted business depended upon receiving billions of dollars in revenue from the very companies that they were supposedly rating. If that’s not an incentive for willful blindness, if not outright fraud, what is? The effect was that they were complicit with the big banks in duping the so-called ‘dumb money’ (read public and private pension funds under mandate to invest only in highly rated securities) into investing workers’ hard earned savings into what turned out to be worthless junk securities. When, finally, one of the agencies dared dip its’ toe in the waters of truth and recently downgraded U.S. sovereign debt (which, given its calamitous risk exposure, is still too highly rated), it was met not with a soothing reassurance that it was doing the right thing, but a baptism of fire and brimstone. In its’ vindictiveness, the U.S. Government immediately set to work supposedly investigating S&P of for its misdeeds. Where were the righteous Feds in 2007, when all of the ratings agencies gave Lehman Brothers AAA ratings right up until the day it collapsed? Why hasn’t there been a global discrediting of the ratings process after fully 90% of all the mortgage backed securities rate AAA by all three major ratings agencies have been downgraded to junk status?

The absolute absurdity of the ratings agencies’ is but one of the foolish schemes the general public seems no longer willing to believe. The second glaring joke is that inflation is low. While that might be true on aggregate, and mainly because the rapidly deflating housing sector is bringing down all ships, inflation for almost everything else the average consumer uses is going through the roof. Take for instance the almost doubling of gas prices over the last three years. Add to that the skyrocketing cost of food and clothing, and you have an American consumer that is facing fast rising prices amidst rapidly falling income and dwindling net wealth. How can the Fed really term their process of diluting the value of the American dollar by running the printing presses a ‘stimulus’ for the economy?